Question

"A series of equal quarterly payments of $3,200 extend over a period of 4 years. What is the present worth of this quarterly payment series at 6.55% interest compounded continuously?"

Answer 1

Quarterly payment of $3200 means an annual payment of ($3200*4)=$12,800 and the total loan amount P for the time period n=4 years would be=($12,800*4)=$51,200.The compound interet rate i is 6.55% in this case.

Based on the formula to calculate Present Worth(PW),we can state:-

PW=P[(1+i)^n-1]

PW=$51,200[(1+6.55)^4-1]

PW=$51,200[(7.55)^4-1]

PW=$51,200(3249.28-1)

PW=$51,200*3248.28

PW=$166,311,936

Thus,the present worth of the quarterly payment series at the given compounded interest rate is $166,311,936